Netflix – Password Sharing Crackdown?
Netflix (NFLX) has been testing a plan to crack down on password sharing. The streamer is said to be sending out a request to some account users asking them to verify that they are in the household of the listed account holder. The ‘suspected’ illegal user can verify or postpone the request, but if postponed, a 2nd request will be made at a random time, and if not verified, the stream will be terminated. According to the Netflix ‘Terms of Service’, passwords cannot be shared with those not living with the account holder, although up to four people in that household can share a common password.
While Netflix certainly has the right to limit password sharing, we expect this is more of a warning than a real crackdown, as about a year ago, after a price increase and a bit of subscriber churn in 3Q, Netflix spoke about the issue of password sharing. At the time they indicated that while they might do some ‘work’ around the edges of the problem, they had no plans to make a major push to limit password sharing, which could cause user alienation and increase churn. We expect that Netflix is doing the same now, letting the public know that it is aware of the situation and might push real abusers to either verify or lose the content, but we expect little real push to bring the majority of their subscribers to absolute compliance with the TOS. In this case the publicity associated would be the antithesis of the expression, “Any publicity is good publicity”, especially when new streaming services are being initiated on an almost daily basis.
While Netflix certainly has the right to limit password sharing, we expect this is more of a warning than a real crackdown, as about a year ago, after a price increase and a bit of subscriber churn in 3Q, Netflix spoke about the issue of password sharing. At the time they indicated that while they might do some ‘work’ around the edges of the problem, they had no plans to make a major push to limit password sharing, which could cause user alienation and increase churn. We expect that Netflix is doing the same now, letting the public know that it is aware of the situation and might push real abusers to either verify or lose the content, but we expect little real push to bring the majority of their subscribers to absolute compliance with the TOS. In this case the publicity associated would be the antithesis of the expression, “Any publicity is good publicity”, especially when new streaming services are being initiated on an almost daily basis.
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